Divestment policy on anchor investors soon

NEW DELHI: The finance ministry will work out a policy for big institutional investors, or anchor investors, in public offers of equity by state-owned companies, even as it has allowed Coal India to enlist one for its upcoming public offer. The department of disinvestment in the finance ministry is working on a proposal that it plans to take to the Cabinet next month.

“As a policy option it should be available to the department in case of all future IPOs (initial public offers),” said a finance ministry official, adding that they expect to get it cleared by October.

A company coming out with a public offer can set aside before the issue up to 30% of the equity for institutional buyers to one such investor, called anchor investor.

The ability of an issuer to get an anchor investor is expected to provide some indication to investors about the quality of the issue. For this reason, the shares allotted to anchor investors are subject to a 30-day lock-in.

Market regulator Sebi allowed anchor investors in public issues through bookbuilding last year, but public sector units still require government approval for using the option.

The department had been considering the option of anchor investors for past issues as well including that of SJVN Ltd but did not use it because of concerns that it could crowd out other investors.

The Rs 12,000 crore Coal India issue is big enough to accomodate an anchor investor, who will also help attract other investors to the issue. If the move goes through, the department could use anchor investors for initial public offers by PSUs such as Manganese Ore India Ltd, though analysts said it would not be used for all issues.